When title companies compete, consumers lose

(This is Part 1 of a three-part series. See Part 2 and Part 3.) "The title insurance industry has been much in the news recently for a variety of alleged abuses of consumers. Is there something fundamentally wrong with this industry?" I think there is, but the abuses reported by the media aren't the problem. The abuses are the consequences of a dysfunctional market. Competition by sellers of title insurance does not benefit consumers the way it is supposed to. When title companies compete, you lose. Industry Structure The title insurance industry is structured much like the wholesale/broker segment of the mortgage market. Mortgage brokers find the customers, and do most of the work involved in originating loans. When the work is done, the loan is funded by a wholesale lender, at a price that lender had posted with the broker earlier. Title agencies are the counterpart of the mortgage broker. They operate locally or statewide, and there are many thousands of them. They find the ...